Natural gas industry gets a boost as Biden changes stance

The president, who has championed a platform for the US’s clean energy transition, said Friday the US is working to ship 50 billion cubic meters of LNG annually to Europe through at least 2030 to help the continent move away from the Wean dependence on Russian supplies.

The announcement came a day after Democrats on the Federal Energy Regulatory Commission backed down on new environmental guidelines and suspended implementation of increased testing requirements that industry officials and Republicans said would impede gas pipeline development.

Shares of major U.S. natural gas companies rose an average of 9% on Friday as major stock indexes were mixed. EQT shares corp

EQT 11.68%

and Southwestern Energy co

SWN 15.63%

two large producers, shot up to close about 12% and 16% higher.

Chen energy inc,

LNG 5.46%

the largest US exporter, rose about 5.5%. Tellurian Inc., which is seeking financing for an LNG project, rose 21%.

President Biden traveled to Poland on Friday and met with US troops stationed near the Ukrainian border; While Russian strikes in Ukraine continued, officials in Mariupol said about 300 people were killed in a theater bombing last week. Photo: Brendan Smialowski/AFP/Getty Images

The gas industry’s prospects have been a concern among sector executives because of Mr. Biden’s anti-fossil fuel stance. But the president has softened some of his positions amid rising energy costs, driven in part by the economic recovery from Covid-19 and, more recently, Russia’s invasion of Ukraine.

The linchpin of the White House has also put the USA and its huge oil and gas reserves in the shale rock as a bulwark against petrostates and authoritarian regimes back at the center of a global struggle for energy resources. The US is the world’s largest oil and gas producer.

Daniel Yergin, vice chairman of S&P Global and a well-known oil industry historian, called the recent developments “a major turning point.”

“It is now recognized that shale – and LNG in particular – is a real geopolitical asset,” Mr Yergin said.

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Mr Biden and his advisers have said they remain committed to ending the world’s reliance on fossil fuels, including gas, and will continue to fund renewable energy as part of their work with European allies. But they also recognized the need to confront today’s dependency.

“Although gas is still an essential part of the energy mix, we want to make sure that Europeans don’t have to get that gas from Russia,” National Security Advisor Jake Sullivan told reporters on Friday.

Toby Rice, chief executive officer of leading US natural gas producer EQT, said the change in the Biden administration is an extremely encouraging political signal that natural gas will play a key role in the world’s future energy mix.

Mr Rice said the US could boost LNG exports sharply over time as companies build thousands of miles of new pipelines and billions worth of new LNG plants. But unleashing that will require broader support for that infrastructure and speeding up the sluggish permitting process, he said.

“The problem we face is that it takes longer to approve something than it takes us to build it,” Mr. Rice said. “The faster we move, the faster we move towards meeting our climate goals and delivering energy security to people around the world.”

LNG shippers have already sent most US cargo to European destinations this year as prices have skyrocketed in the wake of the Russian invasion. American exporters are moving cargo as quickly as possible and are poised to ship a record 11.4 billion cubic feet per day of LNG overseas this month, more than 60% of which will go to Europe, according to market research firm Kpler.

Toby Rice, chief executive officer of US natural gas producer EQT, said the change in the Biden administration was an encouraging political signal.


Photo:

Aaron M. Sprecher/Bloomberg News

FERC has approved 13 U.S. LNG plants that have not been built, with a combined capacity to export about 25 billion cubic feet per day, according to FERC’s February update. The main reason why companies have not yet started building these plants is that they have not yet secured enough supply agreements with customers abroad to finance the construction of these plants.

Part of the deal between the US and Europe is to ensure that European countries also come through to show they can absorb more US gas. They are set to expand their infrastructure to accommodate up to 50 billion cubic feet of additional US supplies annually through 2030, Mr. Sullivan said.

Before the Russian invasion, Biden administration officials had been reluctant to direct US development funds to fossil fuel projects abroad.

Environmentalists and climate advocates in poor countries had urged the government to focus its spending on clean energy to reduce greenhouse gas emissions as quickly as it takes to avoid the worst effects of climate change.

“New LNG infrastructure is a death sentence for the planet,” said Collin Rees, the US program manager at Oil Change International, a group that advocates for renewable energy. “It would take years to build and operate for decades, well beyond any timeframe consistent with meeting climate targets.”

Next week Biden officials and US energy executives from ConocoPhillips,

sempra,

Tellurian and others will meet with German colleagues at the US Embassy in Berlin to discuss bringing more American gas to Germany.

More than half of Germany’s gas imports come from Russia, but after invading Ukraine, German officials destroyed the Nord Stream 2 natural gas pipeline more than 700 miles from Russia and signaled support for the construction of two LNG import plants. It currently has no LNG import facilities.

“If you’re a policymaker around the world today, you’re worried about energy security, you’re worried about carbon footprint, and you’re worried about what your constituents are paying to power themselves.” said Domenic Dell. Osso Jr., executive director of shale company Chesapeake Energy corp

CHK 2.67%

Mr. Dell’Osso said it was encouraging to see the Biden administration and European governments recognizing the need for US natural gas. Chesapeake, he added, is increasing natural gas production by 10% this year in Louisiana’s Haynesville Shale, near export facilities, and is open to opportunities to bring more gas to international markets.

write to Timothy Puko at tim.puko@wsj.com and Collin Eaton at collin.eaton@wsj.com

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